Deere's fiscal second-quarter results beat Wall Street's expectations, but the company lowered its full-year profit forecast for a second time as farmers buy fewer tractors and other equipment as they deal with declining prices for their crops.
Deere, which makes agricultural equipment, cut its profit outlook to $7 billion from a previous range of $7.50 billion to $7.75 billion. Prior to that, the company had forecast a 2024 profit between $7.75 billion and $8.25 billion.
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Shares dropped more than 5% before the market open on Thursday.
The U.S. Department of Agriculture anticipates that 2024 net farm income, which is a broad measure of profits, will total $116.1 billion. That's down 25.5% from a year earlier. Adjusting for inflation, net farm income is expected to be down 27.1% this year as farmers contend with lower prices for soybeans and corn. The USDA said that lower direct government payments and increased production costs are also weighing on farmers.
For the three months ended April 28, Deere & Co. earned $2.37 billion, or $8.53 per share. A year earlier, it earned $2.86 billion, or $9.65 per share.
The performance easily beat the $7.86 per share that analysts polled by Zacks Investment Research were calling for.
Revenue for the Moline, Illinois-based company fell 12% to $15.24 billion. Its adjusted revenue — which excludes finance and interest income — was $13.61 billion, topping Wall Street's estimate of $13.26 billion.
Revenue for the small agriculture and turf division, which includes certain mid-size and small tractors and other equipment, fell 23% to $3.19 billion. Revenue for the production and precision agriculture unit, which includes large and certain mid-size tractors, combines and other equipment, slipped 16% to $6.58 billion.